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Thread: Maternity Leave while operating a small business

  1. #1
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    Default Maternity Leave while operating a small business

    so my wife has a bit of a weird circumstance that I can't exactly find on CRA's website... I can't get a clear answer. hoping maybe there is an accountant or tax expert that will know?
    here is the situation:

    she owns a business (not incorporated, sole proprietorship). this business takes up ~10 hours per week and makes her ~$10,000 a year. she also works a part time job (3 days per week) for a large company and pays into EI via payroll from that job. I dont believe she pays into EI at all from her business income.

    so basically if she were to get pregnant and go on maternity leave at some point, my expectation is that she would collect EI based on her salaried job, and her home-based small business would simply not factor in to her EI payout. If this is true, then my biggest question is: can she still operate her home-based small business and make money from that, while collecting EI/maternity leave for the year?

    my gut says no, but then again her business didn't factor into her EI payouts as far as I know. I know i could just call CRA and ask, but i'm leaving that to a last resort as we all know it will be a huge pain in the ass.

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    I don't know the complete answer, but she will have to report any income from the "home business" while she is on EI, and that may reduce her payment.
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    Based on other similar events, CRA will give her a reduced EI to cover the part-time work that she pays into.

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    Straight from the service canada website.... big thing is the difference between mat leave and parental leave


    If You are claiming sickness or maternity benefits, we will deduct any part-time earnings from your benefits on a dollar-for-dollar basis.

    If you are claiming parental, compassionate care or parents of critically ill children benefits, you normally can earn either a maximum of 25% of your weekly benefit (if your weekly benefit amount is $200 or more) or a maximum of $50 (if your weekly benefit amount is less than $200) without changing the amount of EI benefits you receive for that week. We will deduct any money you earn above that amount from your benefits on a dollar-for-dollar basis.

    However, until August 6, 2016, a Working While on Claim pilot project is in place which changes the way earnings are deducted.

    Under this pilot project, once you have served your waiting period, your benefits will be reduced by a rate of 50% of your earnings each week if the earnings are equal to or less than 90% of your weekly earnings that were used to calculate your benefit rate. Any earnings that exceed the 90% threshold will be deducted dollar for dollar from your benefits.

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    Last edited by codetrap; 01-01-2017 at 10:44 AM.

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    Just don't draw any money from the business until her mat leave is over.

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    My wife is in the same boat. Don't quote me on it but she received 25% of maternity pay for the first 16 weeks now she gets 50% till the end. Not sure what my wife makes though. Pretty sure it's under 20k a year.

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    Originally posted by suntan
    Just don't draw any money from the business until her mat leave is over.
    Not sure if this is an option with sole proprietorship.

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    Originally posted by suntan
    Just don't draw any money from the business until her mat leave is over.

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    Originally posted by Xtrema


    Not sure if this is an option with sole proprietorship.
    It's not, at least to my understanding. SP is direct income.

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    thanks everyone. I will definitely call CRA and see what they can tell me.
    but a very good call on this statement:

    "Just don't draw any money from the business until her mat leave is over."

    i understand this isnt an option with a sole proprietorship but this may be a good enough motivator to incorporate now. then when she's on maternity leave she just doesn't draw any money from the corporation. very smart. will confirm this with an accountant.



    Originally posted by codetrap
    All I can say is this. Call them. You may be surprised. My wife didn't fully qualify for mat leave but they opened a special file for her and she got full mat leave.
    mind elaborating at all on this? I can't picture CRA giving special treatment to anyone... mind boggling!

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    I think I know the answer to this, but it's worth discussing with your accountant when you talk to them.

    If the incorporated business is generating income, and your wife intends to draw a salary in the future based on that income, you may be running afoul of the EI question where it asks you if you have performed any work for which you will be paid later.

    I don't know how you answer your EI questionnaire if you are doing work towards your incorporated business, but not yet generating any income.
    Quote Originally Posted by killramos View Post
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